← Balance of Power
Balance of Power
Weekly Washington Policy Pulse: Trump v. Disney, Stablecoin Accord (May 4th 2026)
00:22:25
Loading summary
Transcript19 lines
- [00:00]
Cincinnati Insurance Narrator
If you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments. With expertise, personal attention and independent agents who focus on relationships, not transactions, the Cincinnati Insurance companies let them make your bad day better. Find an agent@cin fin.com Bloomberg Audio Studios
- [00:40]
Matt Shettenhelm
podcasts Radio News
- [00:45]
Joe Matthew
this is your weekly Washington Policy Pulse on the Balance of Power podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence, senior policy analyst and friend of the show, Nathan Dean shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most recent and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.
- [01:08]
Nathan Dean
Good morning and good afternoon everybody. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in the Washington, D.C. bureau. Want to welcome you to the Washington Policy Pulse. And we also want to say welcome to those of you who are calling in and listening to us via the Balance of Power podcast. We always appreciate your listening. Today is May 4th. May the 4th be with you. It is 10:02am here on the East Coast. We're gonna have somewhat of a quicker call today, so let's go ahead and jump right into it. Congress is on recess for two weeks or approximately 10 days, so expect somewhat of a lighter side on the congressional front. Just as a reminder though, we are tracking negotiations that are still taking place on a housing piece of legislation. This is important for those of you who are investing in build to rent communities or are exposed to that sector. Those negotiations continue. And this, as a reminder, is under the housing bill that already passed the House. I'm sorry, that has passed the Senate and is with the House. This would actually require build to rent communities to dispose of their investments after seven years. So very important, those negotiations are still continuing. But the big congressional news that came out last week was actually a lot of new congressional news. Call it the DHS shutdown ending. Call it the advancements of the record, the advancing the reconciliation bill, which for what it's worth, we still think is up and can pass by June 1. As a reminder, this is a $75 billion deal that funds the Department of Homeland Security. Think of it as an appropriations bill. Not all that exciting for those of us in the markets. We also saw the farm bill advance by a vote of 224 to 200. For what it's worth on the Farm bill. We did see some agricultural stocks moving based off of this. I think it's more so codifying the status quo in terms of the conservation resource program and other types of agricultural funding. This is not the $20 billion in farm aid for what it's worth. That's something separate. But you know, we put out our note on the terminal on the bill. So if you do want to take a look, keep in mind at that. But I think the really big news that came out this week, this past week was on Friday and this was an agreement on stablecoin yield regarding the Clarity act or this crypto market structure bill. As a reminder, you know, this is the bill that would provide a regulatory framework for companies like Coinbase, Robinhood, etc. And there's been this holdup over stablecoins because right now it's under the Genius act you're prohibited from paying interest on stablecoins. However, companies like Coinbase can offer reward programs on stablecoins that they have partnerships with. Now under the agreement, the text is out there. Under the agreement you would be able to use stablecoins or pay rewards based off of transaction as long as it doesn't actually mirror what you're getting. Somewhat similar in terms of interest based off of an interest bearing deposit. So essentially what happens here is if you're having a transfer of a payment or if you're having a. Let me just pull up the language so I get this right. If you are essentially have a functionally equivalent to the payment of interest that would be banned, but rewards are based off of transactions, market making and quote use of product and service. Now the specifics of that would actually come out from an SEC and CFTC rulemaking that would have to be issued within one year of the Clarity act passing. Now I've always been at 60% chance of passage, but according to the Cal Polymarket contracts, people are feeling a little bit more optimistic about this. It went from 40% last week up to about 62% now. Now where we are going from right now is we are going to have a mark. I think Senator Thom Tillis in North Carolina has said that he wants Senator Scott, the chairman of the Senate Banking Committee to have a markup look for that to be in mid May. Now for what it's worth, we have not seen or at least I have not seen any public statements from the banking industry yet on whether they are on board with this. But Coinbase has already come out publicly and said they are on board with this and they agree. Now there are A couple of other folks in the crypto space here in Paul in Washington that are voicing displeasure with this. And I even just got the question from a client this morning of why would Coinbase be in favor of this? And a lot of this is also regulatory. I have seen this in many, many instances where when a piece of legislation or a new regulation comes out onto an industry that doesn't have that type of legislation, a lot of times you see the mom and pops suffer in terms of market share to the detriment or to the benefit of those larger players. And so Clarity act is going to be very expensive for these companies to actually adhere to. And if you're a company like Coinbase or Robinhood, you have the compliance spend, you have the technology spend, and you have everything else that you need to move forward. So again, look for that markup sometime in mid and there are still issues related to ethics. What I'm getting from the Hill is that they would much rather deal with the ethic concerns when they are on the floor of the Senate. So once they're past the markup, AKA that's a way to say, look, I understand there are concerns, but if we're going to have it like right at the end, are you going to derail the bill over ethics concerns? So I think that's more of a political tactic to just get this thing going forward. So again, Clarity is actually looking like there's some momentum here. But again, we have to wait and see what the bank response is because the banking trades were silent last week. Other things going on. Spencer Lieberman out of our Chicago office and I put together a note on the highway authorization bill if you're in the infrastructure space, this is somewhat important to you. I apologize if I spoke about this last week, but I really want to just hammer down that we had a $1.2 trillion Infrastructure Investment Jobs act, the IJA, as of right now. If you were on the earnings calls last week for like companies like Vulcan, CRH and Martin Marietta, a lot of that has been allocated but not spent. And so this is actually somewhat important because even though you're anticipating several hundred billion dollars coming out for infrastructure in the next few years, the highway reauthorization would give another $500 billion over the next five years. And it's going to favor mostly railway, I'm sorry, mostly bridges, roads and highway, over rail transit and over electric vehicles. So you're really looking at like those three names that I mentioned, the crh, Martin Marietta and Vulcan. Think of those Traditional companies that are doing cement and build. And as a reminder if you're trying to out infrastructure projects, how it works in the states is that if you're driving down the highway and you see a road that says that this infrastructure bill is, you know, the workers on the highway, those are usually mom and pop workers, those are small businesses and they've either been contracted by the federal government or they've been contracted by whatever agency and then they go out and actually purchase the raw materials and the equipment from the publicly traded companies. And so generally speaking, and this is just high level, but generally speaking, you're looking at like an 18 month time lag between when the funds actually get to those small mom and pop companies to then when it hits the income statement of those larger companies. So again, just something to keep in mind, again, it's a rule of thumb. But you know, something I always like to tell folks, two other things before we get to the star of the show. Finally, we saw Last week the 60 day timeline for this War Powers resolution come and go. As a reminder, you know, under the War powers resolution in 1973, you know, Congress has to approve of any military conflict. After 60 days. President Trump notified Congress that he thought of the Iranian conflict as quote, terminated. And so the thinking in the White House here is that it's going to reset the clock. That's not what Capitol Hill is thinking. But again, if you attended last week's call, you know that I said that pretty much President Trump was going to ignore this deadline. But there is this 90 day deadline out there and that is this 30 day extension. And that is where some Republican senators like Senator Collins of Maine, Senator Curtis of Utah, for example, the 90 day deadline is where you're gonna beginning to see a little bit more pushback I think from Capitol H. But again, it's not going to change anything. The last two thoughts, actually I said last two thoughts before. Now I have two thoughts. If you're following the SEC rule on quarterly reporting, it's going to be coming out fairly soon. Bloomberg News, this is our friend Lydia Biote over at Bloomberg News reported that this proposal which would allow publicly traded companies to go from quarterly reporting to semiannual was released by the Office of Management and Budget. That was the last step before it could actually go public. So look for the SEC sometime time potentially I would guess next week because I haven't seen a meeting notification yet. But look for the SEC potentially as soon as next week to release this proposal that would allow companies the option of going to semiannual. If you're sitting in Europe right now, you know that it's, you know, it's usually that's the situation over there. But again, our research shows this is what our view is, is that you will see smaller companies take advantage of this. Now, there's always the flip side, the smaller companies, look, if you got a good story to tell, you want to tell it four times a year. But you are going to see companies over time begin to explore this idea semiannual. So again, it's something that companies are at least going to be looking at. So again, that's going to be coming out fairly soon. And then I promise the last thing before we go to our star of the show, watch out for tariffs. I wrote a column for Bloomberg News on Friday last week, and this is when President Trump just after said that he was going to increase tariffs on European autos up to 25%. Start thinking of tariffs being is that we have lots of Section 232 and Section 301 investigations that are going on. And the general rule of thumb is that these investigations would be over by Memorial Day or for late bank May holiday for those of you in the UK So essentially in about two and a half, three weeks, once those investigations are over, President Trump would then have the authority to start putting out statements saying, look, these Trump, you know, these tariffs are going up. And we think that he's going to be somewhat constrained on doing that just from a pricing point perspective in advance of the midterm elections. But you also have the USMCA coming up, the USMCA, the U.S. canada, Mexico agreement, the addition to NAFTA that has to be resolved by July 1. Those negotiations are taking place and we're beginning to see some political issues between the U.S. canada and Mexico erupt. As a part of that, I can send you my column from Friday to talk about a little bit more. But if you want to chat with us about usmca, feel free to send us a ping. But just keep in mind, tariffs are coming up. Okay, so now we'll go to the start of the show. I want to bring in Matt Shettenhelm. Matt, I just made you listen to about 12 minutes worth of other stuff, but you probably have the most exciting stuff that's going on right now. And this is President Trump versus Jimmy Kimmel. For those of you who are not in the United States, Jimmy Kimmel is a host of a show on late night television that's run on abc, which is a network owned by Disney. And because of the White House Correspondents Dinner, Jimmy Kimmel made a joke about Melania Trump and President Trump and First lady came back and said that Jimmy Kimmel should be fired. And then in response to that, or maybe not in response to that, but at least that's how people are reading it, the FCC came out and said they wanted to do an early review of Disney's licenses as a result. So with all that being said, and, man, if I've screwed up anything, please correct me. What's going on with Disney and President Trump? Yeah.
- [12:18]
Matt Shettenhelm
Thanks, Nathan.
- [12:19]
Nathan Dean
So.
- [12:20]
Matt Shettenhelm
So, Well, I mean, to start, Brendan Carr says it had nothing to do with, with, with Jimmy Kimmel and Brendan
- [12:27]
Nathan Dean
Carson, the chairman of the fcc.
- [12:28]
Matt Shettenhelm
Yeah, yep, yep. And so that was his statement at the FCC meeting last week. And what, what the FCC did here was call for an early renewal of, of Disney's eight TV station broadcast licenses. Those run until the end of Trump's term or after Trump's term. And typically the renewal of those licenses wouldn't start until basically at the very end of Trump's term for the first couple of those licenses. What this order did, very short order that the FCC put out on Tuesday, was to speed up that review and start it early and say, look, we're going to look at the renewal of those licenses right away and so make a filing by the end of May to start that process. And it suggested that it was about non compliance with FCC rules, including unlawful discrimination. And so what Brendan Carr said last week at the meeting was this is really about Disney's hiring practices and potentially its DEI initiatives and whether those are in non compliance with the law. I think there's a lot of skepticism given Brendan Carr's past statements on this issue, which have really, you know, looked much more closely than FCC chairs in the past at content choices and there and Jimmy Kimmel and things like that. So, you know, Brendan Carr says it's about dei and that very well could be what's driving this. But once the FCC starts a renewal review, anyone can file a petition with the FCC to raise concerns about Disney's practice practices. And it's very likely that President Trump's concerns are going to reach the FCC's docket on this issue. And Disney's going to face criticism for airing Jimmy Kimmel content. And so that will tee the issue up for the fcc, even if Brendan Carr is technically correct, that that wasn't what drove this release last week.
- [14:48]
Nathan Dean
So is this actually so. And folks, so let me paint the scene here. So we saw in the terminal President Trump did this. I leaned back and I looked at Matt, who sits like two seats over there, and I was like, Matt, is this actually even a financial, like, does Disney even need these broadcast licenses? Like, is this even such a big deal? And I think I annoyed everybody sitting around me because I said it in a pretty loud way. But Matt, I'm going to ask you that same question. You know, is this a big deal?
- [15:17]
Matt Shettenhelm
Well, Disney is a giant business, it's a diversified business. And what we're talking about here are eight TV stations and they're big TV stations. They have the New York market, Los Angeles market, Chicago market. They're nice to have, but they make up less than 2% of Disney's revenue. And what we're talking about here is the FCC not renewing those licenses. These run for eight year terms. Typically, as I said, they run. We're not talking about revoking those licenses early. The FCC could do that, but it's not. And so these will run into 2028, 2029, 2030. The FCC almost never denies renewal. Historically, if you look at the past, you know, 60 years, it's happened. You can count on, on one hand the number of times that the FCC has done it. So what we're talking about here is, is the threat of, of not renewing lice a very small piece of Disney's business. And if the FCC did that now, it's possible Disney is, you know, violating FC FCC rule after FCC rule and maybe the record will show that eventually in that case. Look, the law does give the FCC power to not renew a license. If there's serious violations of rules, if there's a pattern of abuse of the rules, it's conceivable the facts will show that historically though, the FCC has treaded very lightly here. And non renewal goes to issues of much more egregious conduct. And the important thing to know, a couple important things to know by just holding an investigation early. There's no legal check on the fcc. So Brendan Carr can escalate these issues and shine a light on the issue. Maybe because for political reasons or because President Trump wants an investigation. There's no check on investigating. The check comes in with final action. That's when there are lawsuits filed to challenge the fcc. And even before that, the FCC needs to hold a full hearing on whether it should not renew these lawsuits licenses where Disney's going to have, you know, a number of defenses on that. It's very difficult just to get through the FCC side of denying a renewal. And then There's a court check behind it. So I bring a lot of skepticism that this is, is a material business risk. Even if you consider these eight TV licenses, you know, 2% of revenue. Okay, not nothing nice to have for Disney. Very unlikely to actually be denied renewal. Much more likely this is a platform for the FCC to use for, for political purposes.
- [18:15]
Nathan Dean
No, that sounds good. And then I'm going to put you on the spot just because I know you're covering Elon Musk and the OpenAI trial. What's the latest on that?
- [18:24]
Matt Shettenhelm
Yeah, so we're in the middle of trial here, so probably another week of trial before we could see a decision in that case that, you know, it, it surprised me that the case has gotten this far when, you know, there, there really wasn't much of a, a written agreement that, that said, look, you have to continue to operate OpenAI as a charity. And yet Elon Musk has convinced this judge to let the case go all the way to this stage where we are waiting, awaiting a trial decision, a jury decision, which the judge then can adopt or not. And so to me, to know here, look, I still think big picture Musk is an underdog in this case, but this judge is pretty sympathetic to the claims that maybe, you know, there's something to this. And she will ultimately be deciding whether Musk succeeds on this claim of a breach of the charitable trust. So to me, there's a real risk here that this next ruling goes against OpenAI and that she could impose some sort of remedy that says, look, you can't go pursue profits for private investors that you promised this would be a charity first for the good of the world. And so there could be limits on OpenAI that its competitors don't face. And it would take an appeal to the Ninth Circuit, which, which would, could, could take a whole year to overturn those. I, I think there would be a strong case to challenge on letting this case get this far. But it takes time and it cast a shadow over OpenAI for all of that time at a time when you don't want a shadow because you're competing with other AI companies that are fighting for investment, thinking about IPOs and things like that. So look for a decision on the merits in the next week or two, I think. And then if it goes against OpenAI, you're looking for a decision from the judge on what exactly is the remedy.
- [20:33]
Nathan Dean
And just real quickly, you have in your note what's at stake. There's Microsoft's in here as well. And you're saying $13 billion is at stake for Microsoft. What's the, just real quickly, what's the, what's the exposure for Microsoft here?
- [20:44]
Matt Shettenhelm
Yeah, so, so Microsoft has, has made a number of investments in OpenAI that really don't treat OpenAI like, like a charity. It, it treats it like a for profit business. And the allegation against Microsoft is that there was a breach of the charitable trust here and Microsoft aided and abetted that, that it basically contributed to taking OpenAI away from its charitable purposes and was fully aware of it. So Microsoft's going to present the case. Look, we didn't know any of that. We didn't know that there was a charitable trust here. We didn't meaningfully contribute to it. So I think there are substantial defenses there. But as I said, this case has gone this far that it merits watching. Probably Microsoft's risks are behind OpenAI's because it's sort of secondary in terms of potential liability. But still, Elon Musk is firing all on seeking every remedy he can. And as you said, it's substantial monetary ask of Microsoft. It potentially could limit its contracts with OpenAI going forward and its investments in the company there, all depending on what sort of remedy this judge comes up with. If, if the initial decision goes in Musk's favor.
- [22:09]
Nathan Dean
Okay, well, we will go ahead and leave it there. Thank you Matt for joining. Always appreciate it. And to those of you who have been listening, we always appreciate you joining on every Monday. We hope you have a wonderful week and we will talk to you soon. Great, take care.
- [22:25]
Joe Matthew
Our thanks to Nathan Dean, Bloomberg Intelligence senior Policy Analyst, bringing you the latest installment of his weekly Washington policy Pulse. For more from BI or to join this call live each week you can email nathan@ndeanloomberg.net that's n d e a n bloomberg.net and come back to the podcast later today for the latest edition of Balance of Power.
- [23:00]
Cincinnati Insurance Narrator
If you follow markets, you know the value of long term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can't prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments. With expertise, personal attention and independent agents who focus on relationships, not transactions, the Cincinnati insurance companies let them make your bad day better. Find an agent@cin fin.com A business gift
- [23:36]
Joe Matthew
should do more than check a box. It should reflect your brand and show someone they're appreciated, recognized and truly seen. 4imprint offers thousands of high quality customizable products like premium apparel, drinkware, tech and more, making it easy to create a gift that feels meaningful and on brand. And with 4imprint's expert support and their 360 degree guarantee, you can be 4imprint certain your order will arrive exactly as intended. Explore gifting with confidence at 4imprint.com 4imprint for certain.